Solar module manufacturers will start competing for their share of $1 billion in production subsidies within months, with funding expected to flow from mid-2026 to help meet a 10 fold increase in demand for solar energy.
Consultation on the proposed design of the Solar Sunshot program began on Tuesday before round one opens to applicants in early August. The Albanese government is targeting the end of the year for a decision on who receives the subsidies, which will flow for a decade from financial year 2026-27.
The 10-year support period for solar module manufacturers will have a “fixed sunset date irrespective of individual project timelines”.
Prime Minister Anthony Albanese announced the Australian Renewable Energy Agency (ARENA)-administered program at the end of March, for inclusion in the federal budget in mid-May.
The program aims to commercialise Australian solar photovoltaic (PV) innovations domestically and to build sovereign capability in solar manufacturing over the long term.
The design of the Solar Sunshot will be finalised by ARENA in consultation with the Department of Climate Change, Energy, the Environment and Water.
The annual demand for solar PV is “projected to grow from current levels of 5GW per annum to over 15GW per annum by 2030 and to 50GW per annum by 2040 if Australia is to reach its vision of becoming a renewable energy superpower”, according to the consultation paper released Tuesday.
ARENA chief executive chief executive Darren Miller said the scale of solar deployment needed to meet Australia’s emissions reduction targets mean “we cannot rely solely on importing solar panels from overseas”.
“There is a credible pathway for building a solar manufacturing industry in Australia. A collaborative and committed approach from government and the private sector gives us the best chance at tackling this challenge,” Mr Miller said.
Round one of the program is expected to offer solar module manufacturers – the final assembly stage in the supply chain before installation – module production credits “aimed at bridging the gap between the cost of production and the expected sales price”.
The consultation currently proposes a fixed grant per solar PV module produced, measured in units of power. Applicants must specify the total number of credits that would require annually for an amount of module, measured in megawatts.
As the program is currently designed, successful applicants that produce more modules than specified will not receive additional funding support and funding will only support new or additional manufacturing capacity.
Since ARENA’s remit is to “ensure the financial viability of pre-commercial projects”, significant returns to the solar projects would mean payments were reduced, with the potential for ARENA to recoup prior payments.
Round two of the program will target all other aspects of the solar manufacturing supply chain from quartz mining to panel recycling. Component manufacturing that may be supported includes polysilicon, ingots and wafers, solar cells, solar glass, and aluminium module frames.
Most round two funding is expected to be awarded through production-linked incentives, although other funding mechanisms could also be available. It will not provide support to early-stage technology development but could fund feasibility and front-end engineering and design studies.
However, the design of round two is less advanced than for round one and has not published an anticipated timeline.
Consultation will remain open until May 31, with two online webinars to be held before then.
